Mortgage Rates Trending Lower This Morning

Mortgage rates are moving lower today after holding in a very tight range for the past several months.  This does not mean that there will be a change in the rates that have been quoted recently, but the momentum could be positive if this continues.  All global stock markets have been lowering thus far today. Yesterday, stock indexes ended weaker, but also not a huge amount of price declines. Trading in the mortgage bonds have been positive early, but at 11:00AM, we have seen a little dip as the 10yr has found the floor again at 2.32%.

Tax cuts are moving forward.  The fly in the ointment now is the alternative minimum tax (AMT) for businesses. The Senate has it in its bill, but the House does not. Businesses rebelling and want it dropped. Most continue to believe there will be a bill for Trump to sign before the end of the year.

ADP November private jobs were +190K in line with forecasts, with no revision in October. Friday, the BLS will release the November employment data, as current forecasts call for unemployment unchanged from October at 4.1%, NFP job growth 185K, private job growth 183K, average hourly earnings +0.3% after being flat in October.

Q3 revised productivity +3.0% with estimates calling for +3.3%. Q3 unit labor costs expected +0.2% declined 0.2%. The weakness in unit labor costs adds to the idea that inflation is not likely to increase soon. Second-quarter productivity growth holds at 1.5%. Real compensation growth in the third quarter, that is adjusted for inflation, is now at plus 0.7%, down from an initial rise of 1.5%.

Trump will officially announce today that the US will move its embassy from Tel Aviv to Jerusalem. Not going to sit well with Palestinians or other Arab countries. Pope Francis called for the city’s “status quo” to be respected, saying new tension in the Middle East would further inflame world conflicts.

Tax cuts are a done deal - not totally resolved, but will be. Republicans cannot let this fail, even if the Democrats will not vote for it. Republicans in U.S. House of Representatives began staking out their positions on final tax legislation, days ahead of talks with the Senate. The proposals are estimated to increase the federal deficit by nearly $1.5 trillion over 10 years and touch just about every aspect of the current system. Let me make a point here - the deficit is projected to increase $1.5 trillion as expected now, but that is not what the deficit will total. US annual deficits continue to increase each year, and even with an expected increase in economic growth and better wages, it is unlikely the annual deficits will ebb (-$655 in 2017, -$550B in 2016. (Total debt outstanding at the end of 2017 $20 trillion).

Look for mortgage rates to move a bit lower today, but stay in the very tight channel that's developed over the last couple of months.